How did the Big 3 and UAW Get to this point?
In his most recent column, Ed Achorn cites information from Investors Business Daily, which states that “U.S. automakers pay their average worker just over $70 an hour in total compensation, compared with about $45 an hour for Toyota, Nissan, Hyundai and other transplants.” However, the way the information is presented has led to some confusion. As a recent NY Times article explains, the average current auto worker isn’t making $70/hour, more like $55/hour (this includes salary and benefits). However, the Big 3 are paying all of their workers–past and present–the equivalent of $70+/hour. How did they get to this point?
Micky Kaus explains that union work rules have a lot to do with the current problems. Why have unionized Detroit auto manufacturers manifestly lost out to their non-union Japanese competitors, even when it comes to building cars in the United States–to the point where Congress is presented with a choice of bailout or bankruptcy? There are some obvious culprits: shortsighted American managers, schlocky designers, an insular corporate culture. Here’s another: the very structure of Wagner Act unionism. The problem isn’t so much wages as work rules–internal strictures that make it hard for unionized competitors to constantly adapt and change production processes the way the Japanese do.
Kaus points to this article from 1983:
Under the Wagner Act, management manages. What the union does is complain, and negotiate for a rule limiting management’s right to do what the union doesn’t like. A worker protests that his job should be classified as “drilling special and heavy” instead of “drilling general.” The parties butt heads, a decision is reached, and a new rule is deposited like another layer of sediment. At some GM plants, distinct job categories evolved for each spot on the assembly line (e.g., “headlining installer”). In Japanese auto plants, where they spend their time building cars instead of creating job categories, there is only one nonsupervisory job classification: “production.”
But as Barone explains, where we are now is directly attributable to the tension between “Wagnerism” and “Taylorism”.
[U]nionism was seen as the necessary antidote to Taylorism. That’s not a familiar term today, but it was when the Wagner Act was passed in 1935. Frederick Winslow Taylor was a Philadelphia businessman who pioneered time and motion studies…he believed that there was “one best way” to do every job. Industrial workers, he believed, should be required to do their job in this one best way, over and over again. He believed workers should be treated like dumb animals and should be allowed no initiative whatever, lest they perform with less than perfect efficiency.
Taylor’s work was regarded as gospel by many industrial managers in the 1910s, 1920s, and 1930s, a time when many factory workers were recent immigrants, often with a less than perfect command of English. Auto assembly lines were organized on Taylorite principles to squeeze the last bit of efficiency out of low-skill workers. And squeeze some more. If you ask UAW defenders why they have so many work rules, they will tell you horror stories of the “speedup” dating back to the 1930s. Workers who were required to do some operation 20 times an hour were told to do it 30 times an hour, and so forth. Wagnerism was a response to Taylorism.
Workers hated these jobs. But in the 1930s, with unemployment ranging over 10 percent, they were happy to have them: At least they got a paycheck and there were thousands of others who would be happy to take their jobs if they told their bosses to shove it. Flash forward to 1970, when the UAW was negotiating its contract with General Motors, a story told by William Serrin in The Company and the Union. Taylorism was still the reigning philosophy of management, and workers really hated their jobs. I remember hearing a UAW political operative tell me, with horror in his voice, that a colleague who deviated from UAW discipline “was sent back to the line.” So the big UAW demand that year was “30 and out”—assembly line workers could retire after 30 years on the job. This in turn led the union to demand generous retiree benefits. A worker who retired at 51 wouldn’t be eligible for Medicare for 14 years, and therefore the UAW negotiated incredibly generous medical benefits—elective dental work with no copayment is one that sticks in my mind.
The UAW also created a constituency within itself of retirees who have voting rights in union elections just as actual workers do, and there are now something like three times as many GM retirees as GM employees as voting members of the UAW. Retiree benefits account for the lion’s share of the difference between GM’s labor costs and the labor costs of foreign automakers in the United States.
At the time, the U.S. auto makers could afford to be generous. Heck, they didn’t have any competition, right? Well, that changed and now they are where they are. Bad management and over-aggressive unions have combined to make the situation. There is plenty of blame to go around, but both sides have to adapt to current realities to survive. That means management has to manage better, leaner and smarter and that means unions have to change their organizing model away from the 1930’s and into the actual work environments of the 1980’s, to say nothing of the new millennium.
ADDENDUM: More recommended reading from Rand Simberg:
The auto workers and I grew up in a golden era that it was unrealistic to think could continue. They were so well paid and unproductive, not because the market valued their labor at their wages and their product at its prices, but because they had a foot on the throat of the industry management, thanks to the imposition of the government via the Wagner Act and the NLRB. When each contract came up for renewal, they could single out one company, use the strike funds accumulated from workers at all the companies, and literally threaten to kill it. The next strike, they could do the same to the next one, continually imposing new rules, benefits, and restrictions that strangled the entire industry slowly instead of cleanly killing one company at a time. Remember that too when you blame management for all the problems.